Choosing a health plan

–Linda Stern is a freelance writer. Any opinions in the column are hers. You can follow Linda Stern’s financial notes on Twitter at http://www.twitter.com/lindastern —

Washington’s health-care reform debate could go on for a while, but who can afford to wait?

In the next few months, most employees will have to choose a health insurance plan for 2010. Others may face job loss and the loss of employer-provided benefits, or are newly emancipated — graduated and unemployed — young adults who need to find their own coverage.

They all have this in common: The likelihood of higher premiums, more confusing choices, and more policy “gotchas” that can limit, or even kill, their coverage after they’ve paid those costly premiums. And, the need to nail down coverage before Washington acts. Here’s how to make smart health insurance decisions while hoping that Congress does the same.

— Don’t wait. “All the health insurance proposals have one thing in common,” notes Sam Gibbs of eHealthInsurance.com, an online health insurance brokerage and shopping site. “They don’t start until 2013.” That means finding your own coverage from now until then, without benefit of any of the potential reforms, such as the elimination of screening for pre-existing conditions. But unlike the credit card companies, which met forthcoming legislation by jacking up rates and fees and changing their policies, most health insurance firms are continuing business as usual in the interim. As a matter of fact, between 2008 and 2009, the median premium for family coverage, bought privately, increased less than 3 percent to $329, according to ehealthinsurance’s latest survey.

— Don’t assume your group plan is best. Group coverage can actually cost more than individual coverage. That’s especially true if you are young and healthy, or if your company has a relatively small pool of workers with complicated health problems, or if your boss isn’t actually kicking in much to cover the premiums. If you shop privately for a plan, you may discover a competitive plan that costs you less. That’s what happened to Alex Rivlin of InsureMonkey.com, another health insurance brokerage and shopping site. His last group health plan was costing him $1,027 per month to cover his family of four; he now buys his own similar policy for $396 a month.

— Define your terms. “Even the brightest rocket scientists don’t know about health insurance,” says Rivlin. Maybe that’s an exaggeration, or maybe it’s because they’re just too busy, but it could also be that the legalese in most insurance policies exceeds the complexity involved in running the space station. Break it down by learning as much as you can about the fine print that’s important to you and your family. One place to check, is the website of the consumerist group FamiliesUSA.Planforyourhealth.com, an educational website co-sponsored by the Financial Planning Association and Aetna, offers calculators and articles about insurance.

Beginning September 14, the site will post a new booklet, “Navigating Your Health Benefits for Dummies” that explains basic health insurance terms and offers money-saving tips. Both eHealthInsurance and InsureMonkey offer background info and calculators on their websites as well.

— Don’t cover your first dollar, cover your last. Consumers are catching on to the fact that they pay a lot in premiums to keep their deductibles low. That’s not worth it. You can save money every month by raising your deductibles. Raise them high enough, and you could qualify for a health savings account. These accounts let you take a tax deduction for the money you contribute, and you can withdraw the funds tax free to pay for out-of-pocket expenses. You can also save and invest them for retirement, when you’ll really have high healthcare expenses. Learn more from the Treasury Department or from HSABank, the leading financial firm creating these accounts, at http://www.hsabank.com. Just remember to feed your account, cautions Tracey Baker of the Financial Planning Association. It’s not good to “save” money by raising your deductible without putting away enough to cover it.

— Get a custom plan. Health insurance plans are increasing in number and diversity because many companies are creating plans that differ in small ways from each other. One might include prescription drugs or maternity benefits, or generous mental health coverage, and another might not. You can save money by choosing a plan that has exactly the combination of coverage you expect to use, without a lot of extras.

— Consider these money savers. If you’re married and both working, compare the two plans and choose the best one. Paying for double coverage is rarely worth it. It can be worth splitting the coverage, however, especially if one spouse has health problems. The healthier spouse can buy a less-expensive plan for herself (if it’s the wife) and the kids, and the husband can buy his own individual plan. And ask about domestic partner coverage. Companies in many states offer this, for both same-sex and male-female couples. It can’t hurt to ask.

— Consider your own pre-existing conditions, whatever they are. “Don’t self-diagnose” by volunteering to exclude any of your body parts or disease propensities, says Rivlin. Wait for insurers to look at your health records and tell you what they won’t cover. Increasingly, they’ll offer insurance, but exclude one condition or require a much higher deductible for that particular condition. Not every insurer has the same policy on these specific health issues, so you may have better luck by working with an agent who knows how different insurers approach those conditions.

Most observers believe that whatever comes out of Washington will include a prohibition against excluding or overcharging people with pre-existing conditions, so you may not have too much more time to worry about getting coverage it.

Health insurance is a multi-billion-dollar racket unlikely ever to benefit anyone but its employees, lobbyists, and paid-off officials. All of the “gotchas” and “legalese” Linda mentions (above) are for the purpose of maximizing company profit by minimizing benefit payout. We are essentially paying the parasitical overlords (the insurance companies) one-third of our premiums to decide who gets, and who does not get, their medical bills partially paid out of what is left.